Taxation — Trust companies — Shares of stock — Shares owned by nonresidents — Acts of June 13, 1907, P. L. 640, and May 7, 1927, P. L. 853 — Constitution of United States — Shares of other corporations purchased out of capital — Surplus and undivided profits — Burden of showing — Evidence — Formula for ascertaining deductions — Numerator, denominator and multiplicand.
1. Shares of stock of a corporation may be taxed by the state of incorporation whether in the hands of resident or nonresident owners. [386-7]
2. Under the Act of June 13, 1907, P. L. 640, as amended by the Act of May 7, 1927, P. L. 853, which imposes a tax upon shares of stock of Pennsylvania trust companies, shares of stock owned by nonresidents or foreign corporations are taxable. [386-7]
3. The Act of 1907, as amended by the Act of 1927, is not in violation of the Fourteenth Amendment to the Constitution of the United States. [386-7]
4. The burden is upon the trust company to show that shares of stock of other corporations which it claims are not taxable were purchased out of capital, surplus and undivided profits, but such facts may be shown in two ways: first, if the investment appears inherently as a part of the capital stock structure; and, secondly, if the investment is earmarked and set up as made out of the capital account. [387]
5. Under the Act of 1907, amended by the Act of 1927, which provides that the actual value of each share of stock shall be ascertained by adding together so much of the amount of capital stock paid in, surplus and undivided profits as is not invested in shares of stock of other corporations liable to pay to the Commonwealth a capital stock tax, or relieved from payment of capital stock or tax on shares, and dividing the amount by the number of shares, so much of the shares of the trust company is not taxable as is invested in the stock of corporations which are relieved from the payment of capital stock tax by statute or in any other way by law. [389-94]
6. Shares of stock of a trust company are not taxable under the Act of 1907, as amended, to the extent that they are invested in shares of a federal reserve bank. [394]
Argued May 27, 1935.
PER CURIAM, June 29, 1935:
The judgment in this case is affirmed on the final opinion of President Judge HARGEST.